Example: Calculating the cost of debt Kellogg's wants to raise an additional $3,000,000 of debt as part of the capital that would be needed to expand their operations into the Morning Foods sector. - They were informed by their investment banking consultant that they would have to pay a commission of 3.5% of the selling price on new issues. Their CFO is in the process of estimating the corporation's cost of debt for inclusion into the WACC equation. - The company currently has an 8%, AA-rated, non-callable bond issue outstanding, which pays interest semi-annually, will mature in 17 years, has a $1000 face value, and is currently trading at $1,075. Calculate the appropriate cost of new debt for the firm